[Suprabh Garg is a III Year BA LLB (Hons.) student at the National Law University Odisha]
Provisions for Extension of Mandate of Arbitrator(s)
Section 29-A-(1) of the Arbitration and Conciliation Act, 1996 provides that an arbitration award must be made by the arbitral tribunal within a period of twelve months from the date upon which the arbitral tribunal ‘enters upon reference’, i.e. the date on the arbitrator(s) receive the notice of their appointment. Section 29-A-(3) of the Arbitration Act allows the parties to arbitration to extend the time for a further period not exceeding six months, in cases where the award is not made within twelve months from the reference date.
Further, section 29-A-(4) provides that the mandate of the arbitrators ceases to be effective following the expiration of the stipulated period under section 29-A-(1) and further extended period under section 29-A-(3) of the Arbitration Act, unless further extension of time is granted by the “court”. The ‘court’, while extending the mandate of the arbitrator under section 29-A-(4), also has the additional power to substitute the arbitrator, if it deems fit, by virtue of section 29-A-(6) of the Arbitration Act.
Interpretation of the Word – “Court”
The word “court” for the purpose of Part I of the Arbitration Act has been defined under section 2-(1)-(e) of the Arbitration Act. Section 2-(1)-(e)-(ii) provides: “unless the context otherwise requires, the term “court” in case of international commercial arbitration shall refer to High Courts in exercise of its ordinary civil jurisdiction”.
In State of West Bengal v. Associated Contractors, (2015) 1 SCC 32, the Supreme Court had interpreted the word “court” under section 2-(1)-(e) of the Arbitration Act to mean only the High Court having civil jurisdiction, or the principal civil courts, as the case may be. The Supreme Court further held that no other courts, including the Supreme Court, could be contemplated under section 2-(1)-(e) of the Arbitration Act.
Furthermore, a constitutional bench of the Supreme Court in State of Jharkhand v. Hindustan Corporation Company Ltd., (2018) 2 SCC 602 , affirming its judgement in Associated Contractors, reiterated that the Supreme Court could not be considered as a “court” within the meaning of Section 2-(1)-(e) of the Arbitration Act.
In light of the aforesaid provisions and subsequent judicial interpretation, ‘court’ for the purposes of international commercial arbitration would mean only High Courts and it would have the jurisdiction to extend the mandate of arbitral tribunal under section 29-(4) of the Act. No other courts, including the Supreme Court, will be contemplated as ‘court’ for the purpose of international commercial arbitration.
Challenges on Reading the Word ‘Court’ under Section 2-(1)-(e) into Section 29A
The plain reading of section 2-(1)-(e) and the interpretation of the word ‘court’ poses several challenges which have been dealt subsequently by the author.
Conflicting powers of the Supreme Court and the High Court
As is well settled, an arbitrator in case of international commercial arbitration can either be appointed by mutual agreement of the parties in terms of section 11(1) or upon reference by the Supreme Court in terms of sub-sections (4) to (6) of section 11. The ‘explanation’ to section 11 makes it clear that only the Supreme Court is vested with the power to appoint an arbitrator in case of international commercial arbitration and the High Courts do not exercise such powers, unlike in the case of arbitration other than an international commercial arbitration.
In Bhanubahi Ramanbhai Patel v. Nilesh Ramanbhai Patel, Misc. Civil Appeal Petition No. 1 of 2018, the Gujarat High Court had held that the power of the ‘court’ under section 29-A-(6) to extend the mandate of the arbitrator is coupled with and is concomitant with the power to substitute the arbitrator. Therefore, an absurd situation is currently prevalent in cases of international commercial arbitration in India. On the one hand, the Supreme Court has been given the exclusive power to appoint an arbitrator in terms of section 11(4) of the Arbitration Act and, on the other hand, the power of the Supreme Court, to substitute and extend the mandate of the same arbitrator has been taken away by Section 2-(1)-(e) and vested to the subordinate High Courts.
This clearly leads to a situation wherein the High Courts have the power to transgress with the decision of Supreme Court and remove the person who has been appointed by the Supreme Court.
Disregarding the Legislative Intent and Rendering the Provisions of the Act Futile
The legislature has used a caveat clause in the beginning of section 2, which contains the ‘definitions’, i.e. “unless the context otherwise requires…”. The Supreme Court in Indore Vikas Pradhikaran v. Pure Industrial Coke & Chemical Limited, (2007) 8 SCC 705, while interpreting the words “unless the context otherwise requires”, held that the courts should reject plain reading of a term from the definition in the Act and assign a meaning in a way to fulfil the legislative intent, unless the context otherwise requires.
Further, in Balram Kumawat v. Union of India, (2003) 7 SCC 628, the Supreme Court had held that the courts should not construct the meaning of the terms used in the legislation so as to defeat the plain intention of the legislature. Furthermore, in Falcon Tyres Ltd. v. State of Karnataka, (2006) 6 SCC 530, it was held that the courts should interpret the words in a statute in manner to give effect to the intention of the legislature.
It would be incongruous to say the legislature intended the definition of ‘court’ under section 2-(1)-(e) to be read for the purpose of section 29A and create a scenario that would lead to conflict of power between the Supreme Court and the High Courts and render section 11 of the Arbitration Act futile, while at the same time defeating the purpose of the Act.
Seen from every prism, it would be entirely inappropriate to say that, for the purpose of section 29A, the term ‘court’ in to be construed in terms of section 2-(1)-(e). Therefore, the interpretation of the term ‘court’ under section 2-(1)-(e) in Associated Contractors and Hindustan Corporation should be rendered per incuriam. The High Court cannot transgress upon the power of the Supreme Court to substitute and/or extend the mandate of the arbitrator in a case of international commercial arbitration.
– Suprabh Garg